Category Archives: Pensions

Which Side Are You On? by James Howard Kunstler

Posted on December 28, 2018 | Leave a comment

America’s corrupt economy and way of life are headed for a crack-up, regardless of anything President Trump may or may not do, but the mainstream media is blissfully oblivious. From James Howard Kunstler at kunstler.com:

You had to love the narrative that the financial media put over about the 1000-plus point zoom in the DJIA on Wednesday: that pension funds were “rebalancing” their portfolios. It dredged up the image of a drowning man at the bottom of the deep blue sea with an anchor in one hand and an anvil in the other, switching hands.

Thursday’s last minute 900-point turnaround was another marvelous stunt to behold. Somebody gave the drowned man a pair of swim fins to kick himself furiously to the surface for a gulp of air. The truth, of course, is that pension funds are sunk, however you balance their investment loads while they’re underwater. They over-bought stocks out of sheer desperation during ten years of near-ZIRP bond yields, and started rotating back into bonds as they crept above the ZIRP handle, and now with bond yields retreating, they’re loading up again on still-overpriced stocks that pretend to be “bargains.” Everybody knows that this will not end well for pension funds. Glug Glug.

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Posted in Business, Collapse, Cronyism, Debt, Economy, Environment, Financial markets, Government, Media, Morality, Pensions, Politics

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California Is In Great Financial Shape – And Headed For An Epic Crisis, by John Rubino

Posted on December 27, 2018 | Leave a comment

California is a great place to be…during a bull market. From John Rubino at dollarcollapse.com:

California Governor Jerry Brown inherited a $27 billion deficit from Arnold Schwarzenegger eight years ago. This month he’s leaving his successor a $13.8 billion surplus and a $14.5 billion rainy day fund balance. Pretty good right? Approximately 48 other governors would kill for those numbers.

Unfortunately it’s all a mirage. California, as home to Silicon Valley and Hollywood, lives and dies with capital gains taxes. In bull markets, when lots of stocks are rising and tech startups are going public, the state is flush. But in bear markets capital gains turn into capital losses and Sacramento’s revenues plunge. Put another way, the state’s top 1% highest-income taxpayers generate about half of personal income taxes. When their incomes fall, tax revenues crater.

That’s happening right now, as tech stocks plunge, IPOs are pulled and billion-dollar unicorns endure “down rounds” that shave major bucks from their valuations. So if this is a replay of the 2008-2009 bear market, expect California’s deficits to return to the double-digit billions.

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Posted in Debt, Economy, Government, Immigration, Pensions

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All (Political) Roads Lead To Massively Higher Government Spending, by John Rubino

Posted on December 17, 2018 | Leave a comment

All of the revolutions, quasi-revolutions, and proposed revolutions out there are pushing for higher spending and less taxes. That’s problematic when the overthrown governments are deeply in debt. From John Rubino at dollarcollapse.com:

The past few years have seen more than the usual amount of political upheaval. But, interestingly, most regime changes have resulted in pretty much the same thing: Higher government spending and bigger deficits.

Apparently the only “reforms” today’s voters will accept – which is to say the only actions that don’t get a leader kicked out of office – involve spending rather than saving money.

Three recent examples:

The US
Republicans – the party of smaller government – gained control of the White House and Congress in 2016, and proceeded to take a meat ax to bloated entitlements, lowering the government’s share of the economy to levels not seen since the Reagan years.

Just kidding. They tried to eliminate the newest entitlement, Obamacare, but failed to produce even a coherent proposal. So instead they cut taxes, expanded the military and left everything else on autopilot. Now, nine years into a recovery with official unemployment below 4% — and with the small-government party in charge:

U.S. budget deficit approaches $1 trillion

(MarketWatch) – The Treasury Department says that adjusted for timing-related transactions, the deficit would have been $270 billion over the last two months compared to $250 billion during the same period the prior year, with tax revenue up by 1% but spending up by 4%.

The budget picture is deteriorating as the U.S. taxes individuals and companies less and spends more, mostly on defense and benefit payments to an aging population. Though a growing economy is softening the blow, it’s possible that the annual deficit will top $1 trillion this year.

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Posted in Banking, Capitalism, Collapse, Currencies, Debt, Economics, Economy, Governments, Insurrection, Money, Pensions, Politics, Taxes

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The Festering Social Rift Over Pensions, by Adam Taggart

Posted on December 16, 2018 | Leave a comment

Perhaps the biggest rift will be between private sector employees with inadequate retirement savings and public sector employees with rich pensions paid for by the private sector’s taxes. From Adam Taggart at peakprosperity.com:

Most Americans will never be able to afford to retire.

We laid out the depressing math in our recent report Will Your Retirement Efforts Achieve Escape Velocity?:

  • The median retirement account balance among all working US adults is $0. This is true even for the cohort closest to retirement age, those 55-64 years old.
  • The average (i.e., mean) near-retirement individual has less than 8% of one year’s income saved in a retirement account
  • 77% of all American households aren’t on track to have enough net worth to retire, even under the most conservative estimates.

(Source)

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Posted in Debt, Economy, Governments, Investing, Pensions, Politics

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The only options for Illinois millennials: fight or flight, by Ted Dabrowski and John Klingner

Posted on November 21, 2018 | Leave a comment

We are going to be seeing a lot of stories like this in the not very distant future. From Ted Dabrowski and John Klingner at wirepoints.com:

Don’t expect Illinois millennials to ignore the state’s collapsing finances for long. They’ll soon be asked to bear more and more of the financial and economic costs, from higher taxes to diminishing job prospects to cuts in funding for their kids’ schools. That’s when Illinois’ millennials will either fight back, as they’ve done on many national issues, or they’ll simply leave the state. It’s that simple.

A first sign of that fight came in a recent Crain’s opinion piece – A millennial’s call for fiscal sanity in Illinois. The author Thomas Dowling says “Our generation’s economic future will largely depend on Gov.-elect Pritzker’s ability to balance the state budget, which means solving the state’s pension crisis.”

Dowling seems to get how bad things are. He realizes that even the best-case pension scenario will still be painful for everyone. “Even with reform, residents under the age of 30 – my peers and the children of many of Pritzker’s transition team members – will pay for their parent’s unfunded liabilities for the rest of their lives. We will face the consequences of higher taxes and reduced government services. We are the ones that will shoulder the $129 billion for the foreseeable future.”

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Posted in Business, Collapse, Debt, Economy, Government, Pensions, Politics, Taxes

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The Fourth Turning and War of the Worlds, by Jim Quinn

Posted on November 5, 2018 | Leave a comment

Fourth Turnings produce massive conflict and violence, and the US looks right on schedule. From Jim Quinn at theburningplatform.com:

“In retrospect, the spark might seem as ominous as a financial crash, as ordinary as a national election, or as trivial as a Tea Party. The catalyst will unfold according to a basic Crisis dynamic that underlies all of these scenarios: An initial spark will trigger a chain reaction of unyielding responses and further emergencies. The core elements of these scenarios (debt, civic decay, global disorder) will matter more than the details, which the catalyst will juxtapose and connect in some unknowable way. If foreign societies are also entering a Fourth Turning, this could accelerate the chain reaction. At home and abroad, these events will reflect the tearing of the civic fabric at points of extreme vulnerability – problem areas where America will have neglected, denied, or delayed needed action.” – The Fourth Turning – Strauss & Howe

The paragraph above captures everything that has happened, is happening, and will happen during this Fourth Turning. It was written over two decades ago, but no one can deny its accuracy regarding our present situation. The spark was a financial crash. The response to the financial crash by the financial and governmental entities, along with their Deep State co-conspirators who created the financial collapse due to their greed and malfeasance, led to the incomprehensible election of Donald Trump, as the deplorables in flyover country evoked revenge upon the corrupt establishment.

The chain reaction of unyielding responses by the left and the right accelerates at a breakneck pace, with absolutely no possibility of compromise. A new emergency or winner take all battle seems to be occurring on a weekly basis, with the mid-term elections as the likely trigger for the next phase of this Fourth Turning.

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Posted in Banking, Business, Civil Liberties, Collapse, Crime, Debt, demographics, Economics, Economy, Education, Financial markets, Foreign Policy, Geopolitics, Government, History, Immigration, Media, Pensions, Psychology, race relations, Society, War

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New York City Joins The “Imminent Bankruptcy” Club, by John Rubino

Posted on November 2, 2018 | Leave a comment

New York City has quietly stacked up a mound of promises it will never be able to repay. From John Rubino at dollarcollapse.com:

The “public pension crisis” is the kind of subject that’s easy to over-analyze, in part because there are so many different examples of bad behavior out there and in part because the aggregate damage these entities will do when they start blowing up is immense.

But most people see pensions as essentially an accounting issue – and therefore boring – so it doesn’t pay to go back to this particular well too often. Still, New York City’s missing $100 billion can’t be ignored:

New York City Owes Over $100 Billion for Retiree Health Care

(Bloomberg) – New York City faces future health costs for its retired workers of $103.2 billion, an increase of $40 billion over a decade. It has about $5 billion set aside to pay the bill.

The so-called “other post-employment benefits” liability was disclosed in New York’s comprehensive annual financial report released by the city comptroller’s office Wednesday. The city’s $98 billion unfunded liability for retiree health care exceeds the city’s $93 billion of bond debt and $48 billion pension-fund shortfall.

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Posted in Business, Collapse, Debt, Economy, Government, Pensions, Politics

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More than Half of America Gets More in Welfare than it Pays in Taxes, by Ryan McMaken

Posted on October 25, 2018 | Leave a comment

Do you think those who get more in welfare than they pay in taxes will vote for more or less spending, smaller or bigger government, tax cuts or tax increases? From Ryan McMaken at mises.org:

More than half of Americans receive more money in various types of government transfer payments (Medicare, Medicaid, food stamps, Social Security) than they pay in federal taxes.1

According to a report released this year by the Congressional Budget Office, only the top two income quintiles in the United States pay more in taxes than they receive in government transfers.

Not surprisingly, the lowest income quintiles receive far more in transfers than they pay in taxes:

transfers_ss_taxes.JPG

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Posted in Economy, Government, Labor, Pensions, Politics, Taxes

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With corruption like this, it’s no wonder so many pension funds are insolvent, by Simon Black

Posted on October 8, 2018 | 2 comments

Big pots of money and government attract bad people like shit attract flies. From Simon Black at sovereignman.com:

Last week, the head of a New York state pension fund found herself a new job.

Vicki Fuller, the former head of New York’s $209 billion fund, now earns $275,000 per year working part time for a natural gas group called The Williams Companies– good work if you can get it.

It’s noteworthy that when Ms. Fuller ran her state pension fund, she invested $110 million of taxpayer money to buy bonds issued by none other than The Williams Companies.

Bear in mind that Moody’s, the credit rating agency, downgraded Williams’ financial outlook to “negative” because of the company’s high leverage and risk.

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Posted in Business, Debt, Economy, Government, Investing, Pensions

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A more likely reason Rahm Emanuel dropped out: the Chicago time bomb, by Ted Dabrowski and John Klingner

Posted on September 11, 2018 | Leave a comment

Sooner or later Chicago will go bankrupt, and it’s certainly a plausible supposition that Rahm Emanuel wanted to get the hell out before it does. From Ted Dabrowski and John Klingner at wirepoints.com:

We may never know why Rahm Emanuel decided to drop out of the Chicago mayoral race. But the media is certainly giving him a pass. They say he simply dropped out for fear of losing. But there’s a far more likely reason than that.

Emanuel is smart, and the smart reason for leaving is glaring: He doesn’t want to risk becoming “mayor bankruptcy.” Chicago is a ticking time bomb and Emanuel is jumping ship just in case it goes off.

Don’t dismiss that scenario too quickly. Despite his lofty intentions when he first took office, Emanuel has failed miserably to reform the city’s finances. Now the risk of insolvency is rising.

Chicago’s financials are dire and the city has no plan and no reserves to survive an inevitable recession. In fact, the city has barely kept its head above the water despite a decade of national economic growth. Chicago Public Schools was already at the brink of bankruptcy just one year ago. Continue reading →

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Posted in Business, Debt, Economy, Government, Pensions, Politics, Taxes

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